MedCap exec pleads guilty in fraud case

The former president of
Medical Capital Holdings pleaded guilty to wire fraud Monday in one of the biggest Ponzi schemes in Orange County history.

Joseph J. “Joey” Lampariello, 58, faces up to 21 years in federal prison and a $49 million restitution order when he is sentenced Jan. 14. His plea agreement was filed under seal Friday.

Assistant U.S. Attorney Jennifer Waier declined to say whether the investigation is continuing or whether Lampariello is cooperating with the government.

Lampariello, of Huntington Station, N.Y., is the only MedCap insider who has been criminally charged.

The most prominent remaining insider is the company's former chief executive, Sidney M. Field of Villa Park.

The Securities and Exchange Commission sued Tustin-based MedCap, Field and Lampariello in July 2009. A court-appointed receiver later alleged that MedCap was a “Ponzi-like scheme” that had stolen about $1 billion from 12,000 investors.

The federal charges against Lampariello focus on the last two years of the MedCap fraud and on one of the six entities MedCap created to raise funds from investors, Medical Provider Funding Corp. VI.

Formed in August 2008, MP-VI raised $74.7 million from 700 investors. Supposedly MedCap was going to use the money to buy medical receivables – unpaid hospital or doctor bills that MedCap would purchase at a discount and then collect at full price.

In fact, however, MP-VI bought scores of fake receivables, often from older MedCap funds. That generated profits on the older funds' books and commissions for insiders, including Lampariello.

Lampariello, according to a separate federal charge, earned $6.2 million from MedCap from 2004 through 2008, including $1.47 million in 2008 alone, but failed to file federal tax returns. On Monday he pleaded guilty to a single count of failing to file a tax return in 2008.

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